Pension and Other Postretirement Plans

9 Months Ended

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Plans

PENSION AND OTHER POSTRETIREMENT PLANS

(A) Defined Benefit Pension Plans

The Company sponsors a qualified defined benefit pension plan covering substantially all employees. The plan provides benefits based on the participants' years of service and compensation. The Company makes annual contributions to the plan that complies with the minimum funding provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). On October 19, 2007, the Company's Board of Directors approved an amendment to freeze the Pension Plan as of December 31, 2007. The freeze ceased future benefit accruals to all participants and closed the plan to any new participants. In addition, all participants became immediately 100% vested in their accrued benefits as of that date. Going forward future pension expense is projected to be minimal. Fair values of plan assets and liabilities are measured as of the prior December 31 for each respective year. The following table summarizes the components of net periodic benefit cost.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012			2011		2012		2011
	(In thousands)
Service cost	$	44		—		131		—
Interest cost	232			258		696		776
Expected return on plan assets	(268		)	(259	)	(803	)	(777	)
Amortization of prior service cost	1			1		3		3
Amortization of net loss	196			126		589		374
Net periodic benefit cost	$	205		126		616		376

The Company's minimum required contribution for the 2012 plan year is slightly over $1.1 million of which it expects to contribute just under $0.5 million during 2012 with the remainder to be contributed in 2013. The Company's minimum required contribution was reduced during the third quarter of 2012 as a result of the Moving Ahead for Progress in the 21st Century Act (MAP-21) which was enacted. In addition, the Company has contributions for the 2011 plan year payable during 2012 of $0.4 million. As of September 30, 2012, the Company has contributed $0.7 million to the plan for the 2011 and 2012 plan years.

The Company also sponsors a non-qualified defined benefit plan primarily for senior officers. The plan provides benefits based on the participants' years of service and compensation. The pension obligations and administrative responsibilities of the plan are maintained by a pension administration firm, which is a subsidiary of American National Insurance Company ("ANICO"). ANICO has guaranteed the payment of pension obligations under the plan. However, the Company has a contingent liability with respect to the plan should these entities be unable to meet their obligations under the existing agreements. Also, the Company has a contingent liability with respect to the plan in the event that a plan participant continues employment with the Company beyond age seventy, the aggregate average annual participant salary increases exceed 10% per year, or any additional employees become eligible to participate in the plan. If any of these conditions are met, the Company would be responsible for any additional pension obligations resulting from these items. Amendments were made to the plan to allow an additional employee to participate and to change the benefit formula for the Chairman of the Company. As previously mentioned, these additional obligations are a liability to the Company. Effective December 31, 2004, this plan was frozen with respect to the continued accrual of benefits of the Chairman and the President of the Company in order to comply with law changes under the American Jobs Creation Act of 2004 ("Act").

Effective July 1, 2005, the Company established a second non-qualified defined benefit plan for the benefit of the Chairman of the Company. This plan is intended to provide for post-2004 benefit accruals that mirror and supplement the pre-2005 benefit accruals under the previously discussed non-qualified defined benefit plan, while complying with the requirements of the Act.

Effective November 1, 2005, the Company established a third non-qualified defined benefit plan for the benefit of the President of the Company. This plan is intended to provide for post-2004 benefit accruals that supplement the pre-2005 benefit accruals under the first non-qualified defined benefit plan as previously discussed, while complying with the requirements of the Act.

The following table summarizes the components of net periodic benefit costs for the Chairman and President non-qualified defined benefit plans.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2012		2011	2012	2011
	(In thousands)
Service cost	$	42	9	126	36
Interest cost	228		190	684	722
Amortization of prior service cost	14		92	44	350
Amortization of net loss	286		118	857	447
Net periodic benefit cost	$	570	409	1,711	1,555

The Company expects to contribute $2.0 million to these plans in 2012.  As of September 30, 2012, the Company has contributed $1.3 million to the plans.

(B) Defined Benefit Postretirement Healthcare Plans

The Company sponsors two healthcare plans to provide postretirement benefits to certain fully-vested individuals.  The following table summarizes the components of net periodic benefit costs.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2012		2011	2012	2011
	(In thousands)
Interest cost	$	32	38	97	113
Amortization of prior service cost	25		28	77	85
Amortization of net loss	11		—	31	—
Net periodic benefit cost	$	68	66	205	198

The Company expects to contribute minimal amounts to the plan in 2012.